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August 2018 was characterized by severe market manipulations. We do not believe that different conspiracy theories are reasonable. However, the fact that the cryptocurrency market is very manipulative is indisputable.

Who Manipulates the Market?

We cannot know for sure. Most analysts and experts submit their assumptions as objective facts. Those who actually control the game or are close to this process neither post signals in Telegram channels, nor distribute tips inTwitter or Facebook. So all that you read below is our humble opinion.

We agree with the view that the market is bending under influence of institutional investors. When it comes to, for example, about a thousand bitcoins, their purchase for 7,000 USD and 5,000 USD features the difference of $2 million. This is an astronomical sum for ordinary market participants. Even for serious players this is not a few, because this is not the amount of purchase, but just a “discount” for buying crypto. Not bad discount, isn’t it? Believe, this is just the most banal reason for market manipulations.

In addition to the so-called whales, the market is highly influenced by the crowd behavior. Now this is not so noticeable, but not so long ago panic or moods or inflated expectations in the crypto community played a significant role in price formation. This situation is not bad for institutional investors. Since early 2018, the market has been systematically purged of random people. There are a lot of such people on the market, as there are a lot of those who, on the background of a price jump at the end of 2017, imagines themselves to be a great trader or an investor.

Obviously, the “cleaning procedures” are not over yet. However, there are many people who left the market with disappointment. We are glad of this fact. The market requires smart money. They have been missing all this time. If smart money prevails over random money, the market will significantly change and become more stable. Don’t confuse market stability with the lack of volatility. In this case, stability means reducing the cases when coins show 200-300% price growth per day (or vice versa).

Where Will Bitcoin Bottom Out?

Image source: Flickr/Crypto News Daily

It is important to understand that it is impossible to endlessly dump bitcoin. We express our firm belief that BTC price will not fall below $5000. There are a number of good reasons for this. First, decrease in the price of bitcoin makes its mining less profitable even for large pools. Increasing the complexity of coin mining requires an increase in received reward. This means that with each stage of mining complication, the bottom bar of the bottom of bitcoin rises. Secondly, bitcoin futures trading prevents BTC depreciation. Thirdly, with the penetration of a certain level of prices, it will be almost impossible to stop the fall of the market. No one will take this risk.

What Will Happen to Altcoins?

Altcoins will not go away, but with the beginning of the “stage of institutional investors” they will be significantly weakened. Let’s explain why. Utility tokens will be used inside their platforms, and their growth will depend more on the popularity of the platform. Many altcoins that are positioned as the means of payment are unlikely to be of interest to institutional investors and will not receive powerful triggers for growth. Their only chance is super innovative ideas for scaling and security.

Bitcoin ETF

Image source: Flickr/Крипто Пёс

Crypto market participants simply pray for bitcoin ETF. However, this is a ship for institutional investors, not for ordinary people. Undoubtedly, if the SEC approves Bitcoin ETF, the market will surge. However, it is not reasonable to expect that this will happen on September 30, 2018. Most likely, the SEC will not approve CBOE application on this date. Without going deep into procedural issues, we note that the legislation gives the regulator the right to take a final decision in February 2019. Very few people talk about this, however, such scenario is possible. Hence until the end of the winter of 2019 the market will continue to be prepared for institutional investors’ entering. However, wild price manipulations may be stopped earlier. It seems that as early as January 2019, whales will do everything to show the SEC what the market is attractive, stable and anti-speculative.

What To Do?

If you are a trader, then you should bet on intraday and short-term trading. If you are not a trader and are about to invest in crypto, wait a bit. If you have already invested in cryptocurrency, do not doubt that the investment will bring some profit. The desired growth is simply a little delayed. If you are just starting to invest, then put yourself in the place of institutional investors and do the same as they do: buy bottoms and stay out of risky short-term adventures.

In addition, try not to trust the statistics and logic of the graphs. Constant market falling with periodic corrections doesn’t mean that the price will surge in the near future. It is possible that after price growth, when many people sell their crypto in anticipation of another drop, the market will show a price jump, forcing folks to buy coins much more expensive than they sold them.

We reiterate that this is our humble opinion. There is no TA, just simple analysis of facts.